re: Official CryptoTalk Thread

quote:

---

all of the blood in the water.

---

are you only looking at BTC?

ETH is up 2%
Lots of major alts are holding steady or slightly up while BTC is pulling back.

Not blood in the water at all.

BTC has some inside liquidity down to around $112k. I don’t think it goes lower than that.

No, when I talk about blood in the water, I am only hypothetically talking about my strategy volality trading Bitcoin's price action, when things go bad. I will buy into BITX even when Bitcoin keeps falling. I don't know if Bitcoin will go up or down in the near future or at any point in time. But just say Bitcoin dropped $12K as an example and I was able to buy a stack of BITX every time Bitcoin dropped another $3K. I could have 3 or 4 trades open where I buy BITX and everyone of them in the red. My initial $3K drop would be the deepest in the red. That's what I meant hypothetically. I keep trading with "all the blood in the water". Then I wait patiently with all of those paper losses to turn into profits in reverse order as Bitcoin recovers. I end up making more money than when I just used to hold Bitcoin and GBTC for years riding Bitcoin,'s volatility up and down. When Bitcoin trends upwards and sideways but has decent amplitude price swings along the way, I have less volatility trades open in comparison. I make money on the way up due to all of the Bitcoin and BITO that I hold, but I may make less trading between cash and BITX during uptrends especially if the volatility is lower. Hope that makes sense.

quote:

---

Yeah it does. It’s a “catch the falling knife” trading strategy. What are your exits?

---

Every trade I open has it's own recovery price trigger point. Right now I look at what I perceive as a $3K Bitcoin pullback. So I buy a stack of BITX after that Bitcoin pullback. When Bitcoin recovers back the $3K or higher, I reverse the trade by selling the BITX back to cash. Each trade is independent of the other. I have had as many as 5 open trades at any given time. Sometimes I only have one trade open like right now. It's a risky strategy, but I only trade about 5% of my trading cash at a time. If Bitcoin were to drop $6K before I could trade, I might spend 10% of my trading cash for that BITX purchase. I adjust the pullback amounts when I perceive volatility is experiencing lower or higher amplitude pullbacks. At times in early 2024 I was trading on $5K pullbacks. I adjusted that to as low as $2K at one point.

quote:

---

Basically, as long as BTC price is substantially higher in the long run, you're pretty much gold doing this outside of leveraged ETF degradation - right? It doesn't matter how it gets there.

---

Correct. All of my held Bitcoin and Bitcoin ETFs rise in value, plus all of my BiTX trades eventually get closed out for profits.

quote:

---

What % gain on BITX triggers a sale? Is that a constant or are you more aggressive on some trades than others?

---

I don't look at % gains. I try to figure out what the current optimum pullback amount of Bitcoin's price in dollars is best at the current time. That is based on watching recent pullback and recoveries plus how much time I want to spend trading. If I wanted to day trade, I could initiate volatility trades at $500 Bitcoin pullbacks and recoveries. I would be opening and closing a lot more trades and probably making more money. I retired early and don't want to spend a lot of my free time trading. So if my gut feeling is $3000 is a good amplitude pullback to initiate a volatility trades, I go with that. I can tweak that amount if I miss too many trade opportunities because Bitcoin is going through price swings on average less than $3000 and I keep missing opportunities. Conversely in early to mid 2024 $5000 price swings were happening fairly regularly. I was trading on a $2000 dip, only to regularly see Bitcoin routinely fall several thousand more dollars. So I tweaked my pullback amount to $5000 at that time.

So I determine what I think is a several thousand dollar or more pullback and pull the trigger and buy a stack of BITX with about 5% of our trading cash bucket in each of our retirement accounts (Roth, Traditional and HSA). I just did that when Bitcoin was about $116.9K. My current pullback amount is $3K. So whenever Bitcoin recovers to $119.9 K or higher and I notice this and am available to make a trade, I reverse that trade bu selling BITX back to cash. I have now recovered my original trading cash and I currently put the profits into 3 buckets (more BITO shares that I hold, more trading Cash, and more retirement/spending cash).

But let's say that before Bitcoin can recover to $119.9K or higher, it continues to fall. My open trade of BITX was $116.9K. I would like to buy more BITX if Bitcoin falls at least $3K lower to $113.9K or lower. Let's say Bitcoin falls below that amount and I buy more BITX when Bitcoin has fallen exactly $4K lower to $112.9K at the time of my second trade. I might buy BITX with 6 or 7% of my available trading Cash, and I will wait until Bitcoin recovers this $4K drop, so I reverse this trade at $116.9K. Say Bitcoin falls even more by another $6K to $108.9K before I can make a 3rd BITX trade. That is twice my $3K pullback trigger point, so I buy an even higher amount of BITX using 10% of my available trading Cash (twice the normal 5% of my trading cash per trade). Bitcoin needs to recover the $6K in price back to $112.9K or higher before I reverse that particular trade.

I hope my examples make sense on how I set my price trigger points (both buying and selling BITX) and by what amounts.

When I first got started I used small amounts that I was willing to risk complete loss of any BITX shares. BITX tracks Bitcoin at 2X plus it decays about 2.5% per month. So in a protracted downtrend or sizable downtrend you can get one or more of your initial trades stuck in the red and bleeding badly for months. Such was the case for me in mid December 2024. I had two trades stuck until late June before they finally became profitable to where I could sell them. They tied up about 10% of my trading Cash for 6 months. But that left me with 90% of my trading cash and I was able to open and close many trades for profits.

Also initially I didn't have enough trading cash to trade in 5% increments. I was trading in 50% increments so I could only open two BITX trades maximum. I gradually increased my trading Cash and decreased my trading amount percentages.

This trading strategy is not for everyone. Most people don't have the patience, discipline and ice in their veins to withstand a sustained Bitcoin downtrend or very significant pullback. Whether you establish a trading cash amount of $1000, $10,000, $100,000, $1Million, $10M or whatever amount, if they start this strategy at the wrong time and they are seeing their trades at a 40% loss as an example, they and their spouse are not going to be very happy.

Let's say as an example, you are using this strategy and you have bought $250K of BITX and now it is worth $150K and everyone is still saying the sky is falling. Bitcoin continues to fall. Do you have the conviction and other investments to continue following the strategy even if you lose it all, or do you continue trading like a robot until Bitcoin recovers and all of your trades turn profitable in reverse order?

If you are able to stack up enough wins it doesn't matter any longer and your ice in your veins thickens for when times are bad.

So this strategy is definitely not for newbies or for any amount of funds that you are not willing to risk it all.

This cycle can still get so weird. I hope it doesn’t because I’d rather just hodl for a steady 30% per year diminishing gradually. But it won’t be that easy. It never is.

I agree. All of these new companies, nations, states and pension funds seem to be in the early stages of a race to get their Bitcoin stacks before they get behind. They do exhibit similar behavior as an individual retail customer. Some of them will FOMO and panic sell just like an individual.

Concerning which way Bitcoin is heading in the short term makes no difference to me. It's going up significantly long term. I just react to the current price. I'm close to closing out my BITX purchase just yesterday for 2X gains which might lock maybe 5% to 6% or more gains on that trade.

Agree that Bitcoin is very unpredictable. I still expect a very significant spike sometime this year to $200K or higher. After approximately October is what I am perplexed about. Will we see a top of the cycle and signicant pullback or is the cycle diminishing? I'll definitely back off of my BITX trading on pullbacks around this time.

quote:

---

ETH also didn’t drop as much this past winter as the winter after 2017. I think there may be an argument to be made here that we’re in the process of turning a corner and BTC has peaked or is close to peaking vs ETH this cycle.

---

I was saying this yesterday. It is very, very likely BTC has reached it max dominance of the cycle. Just like the last 2 cycles, ETH gained dominance right after and alts went along with it.

BTC will still make ATHs but ETH will outpace it. It will really pick up when ETH break 4k. ETH is on its way to the top of the triangle at $3600. Once is breaks that it’s on.

Alts are already waking up. Lots have bottoming patterns. Just waiting on breakouts.

I don't see how Bitcoin has reached it's peak, but I don't pay any attention to technical indicators. Supply and Demand should decide where Bitcoin's price goes. This is the first cycle where actual industrial Demand with massive increasing tail winds. How can Supply possibly keep up. Any multi billion dollar whale selling is met more massive big dollar industrial buyers who want to accumulate. Am I missing something?

BTC hasn’t reached its peak in USD, but may be close to peaking vs. ETH, if the 4 year cycle is still a thing.